We in the Berman-Sherman press corps waited on hold for the beginning of the conference call that would bring us the latest bombshell in the contest between the two San Fernando Valley congressmen. Finally, it landed—a charge by Rep. Howard Berman that Rep. Brad Sherman had loaned himself money for political campaigns and charged his campaign organization interest.
It wasn’t exactly a bunker buster. I’ve often encountered this practice in covering political campaigns. A candidate needs money in a hurry to get the campaign going. She dips into the family treasury and makes a loan to the campaign with interest. Later, contributors dump money into the campaign, and the candidate is repaid. This is legal but I’ve always felt there is something questionable about it. The practice permits money to be constantly shifted back and forth in campaigns, and government political enforcement officials, seeking full disclosure, have trouble keeping track of it. In addition, winning candidates hold fundraisers to repay the loan after the election, using their power to squeeze contributors who may have government business before them.
In the conference call and in an e-mail sent out earlier in the day, Brandon Hall, Berman’s senior strategist, said Sherman had loaned his campaign money over several years, and charged interest that totaled $461,000. Hall said the Berman campaign was “not alleging he (Sherman) had done anything illegal” but said he “had crossed over ethical lines” and was “unethical” by using his campaign for “personal enrichment.”
He said Sherman left money in campaign bank accounts for years, charging the campaign interest. Then when he paid the money back, Hall said, “he had to raise money from special interests.”
Parke Skelton, Sherman’s campaign manager, said Sherman charged interest lower than the bank rate. He said Hall’s $461,000 figure was correct. Sherman, he said, would repay part of a loan with contributions. But some of the debt remained after a campaign, and sometimes grew as Sherman loaned his political operation more money for the next campaign—charging interest on the unpaid balance.
Skelton said the Berman effort, to be featured on television and radio ads and mailing, as well as on the Internet, was designed to “distract voters from his own astonishing record of abusing public office” by using a government car for private trips and employing his brother, Michael Berman, as a campaign consultant.
This is pretty complicated stuff but the Berman campaign has reduced it to a simple ad on a new website.
Sherman is leading in the polls, largely because he had previously represented most of the new district, created by a reapportionment that combined the Berman and Sherman districts. Now, Berman strategist Hall said Berman will use the advertising to “draw a contrast with Brad Sherman” in the parts of the old district Sherman represented.